Hosting Companies: Can They Be Trusted To Police Themselves?

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As industries mature, you expect to see a certain degree of consolidation. But this can lead to monopolies, with all the problems they bring. Given all of the merger news we've seen recently, is this the challenge now facing the web hosting industry? And what can be done about it?

Recently investment firm GI Partners (http://www.gipartners.com/) made a huge news splash by acquiring controlling interests in two of the Internet's largest dedicated hosting businesses, Everyone’s Internet (http://www.ev1.net/) and The Planet (http://www.theplanet.com/). This is pretty big news by itself, and has already been publicized to death. Not too long after the merger was announced, another announcement from GI Partners confirmed the obvious: ev1 and The Planet were being merged into one unit.

Any time a merger of this magnitude occurs it raises some questions. For starters, what kind of impact will the merger have on already existing clients? How will it affect the industry as a whole? Will the lessening of competition have negative ramifications for prospective hosting clients out there? Many of these questions are at the core of why the U.S. government created anti-trust laws so as to prevent monopolies from dominating commerce and to ensure a healthy competitive environment where only effective businesses would flourish.

I know what you are thinking. What about Microsoft? What about the telcos? Well what about them? Microsoft is now facing stiff competition from the open source movement, as well as from Google on the Internet front. The telcos never had it so bad with free Internet calling which they NEVER foresaw, as well as some deregulation by the U.S. Sooner or later monopolies – at least in the U.S. -- are challenged one way or another by newer, more robust businesses. However, on occasion the lead time a company might receive before it garners any worthwhile competition could supply a pretty significant stranglehold, making it extremely difficult to remedy (see Microsoft).